A&R Whitcoulls Group is the owner of a number of prominent brands on both sides of the Tasman.

While the group is best known for its Whitcoulls and Bennetts bookstores in New Zealand and Angus & Robertson (A & R) bookstores in Australia, it also owns Calendar Club, and the WH Smith bookshops at Auckland, Hong Kong and Wellington airports. All of the above divisions are wholly-owned by Pacific Equity Partners.

In New Zealand the Whitcoulls Group comprises 62 stores nationwide and it’s estimated that approximately 45% of all New Zealanders enter a Whitcoulls store at least once a month. In Australia A & R is the largest book retailer with 103 directly-owned stores and 61 franchised stores located in every state and territory.

Keeping all of these outlets stocked with merchandise is a considerable undertaking.

The bookstores don’t just sell books and periodicals; the full range extends to all types of stationery, DVDs, videos, computer and board games, as well as many other gift items.

A&R Whitcoulls systems support group (SSG) manager Maureen Maloy, says both Whitcoulls and A&R have an active list of 150,000 SKUs each and the companies combined will typically place up to 50,000 purchase orders per month. Some of the larger purchase orders may contain hundreds of line items.

“In the past, in Australia individual stores did their own ordering, goods receipting and invoicing on standalone systems,” says Maloy.

Then in 2000, Whitcoulls implemented SAP for Retail - with A & R following suit in 2004 – and started to order centrally.

“Before the A&R system was put on SAP they did some central updating from the store systems but it was never perfect and once errors were made they were impossible to correct,” says Maloy. “Incorrect codes, prices and quantities were corrected at the stores when stock takes occurred but the central system did not have an accurate picture of the true store positions. The result was that the national office didn’t really know exactly what was in the stores and could not make central stock decisions.”

The supplier ordering system for new titles was also far from ideal.

“What used to happen was that the A&R head office would get a spreadsheet from the major distributors detailing the products on offer and the category managers would send a spreadsheet back saying which ones to send to each store,” says Maloy. “One of the problems with this system was that each vendor had a slightly different format which took a lot of working around and follow ups by phone.”

While this system worked adequately with the bigger suppliers, it did not cater for the myriad of smaller publishers which are a feature of the book trade.

With the implementation of SAP all purchasing was centralised. This increase in purchase orders from head office was a major change. The bulk of purchases on each side of the Tasman are placed with about 20 main suppliers, but the full list of suppliers runs to well over 1,000 distributors and publishers.

While it is much easier for A&R Whitcoulls to deal with the larger distributors Maloy explains that smaller suppliers also have an important role to play.

“Usually the smaller suppliers are supplying a specialised product, such as a book with local significance which needs to be stocked in a certain city or area. While the big distributors have full electronic facilities some of these smaller suppliers are still working with a fax machine.”

What A & R Whitcoulls needed was a partner that could act as an electronic clearing house between the retailing operations on both sides of the Tasman and the suppliers, from the largest distributors and to the smallest back room publishers, in Australia and New Zealand.

It found such a partner in The ECN Group, which specialises in providing integration and messaging solutions that enable businesses to electronically manage and exchange a broad range of information flows across their organisations and communities of interest.

Two subsidiaries of The ECN Group - ECN in New Zealand, and TEDIS in Australia -had already developed relationships with Whitcoulls and A & R respectively, but last year these relationships were put on a formal footing with the signing of a partnership contract between The ECN Group and A & R Whitcoulls Group.

The partnership has allowed A & R Whitcoulls to effectively outsource the B2B document exchange between the retailing arms and the suppliers, which has delivered improvements in efficiency and accuracy to all parties concerned.

“The fact that we can give the problem as a whole to ECN-TEDIS and then leave them to sort out the details has been very helpful to us,” says Maloy. “A single purchase order might be going between several servers in Australia and New Zealand, but I don’t want to know about that. I just want to know that the order has been delivered and ECN takes care of that.”

One of the most significant advantages of the trans-Tasman partnership is that it has allowed A & R Whitcoulls to begin the process of automated invoicing with its major suppliers.

Maloy explains that automated invoicing means that the delivery and invoice information is received from the suppliers in an automated format. The system then uses that information to allow for a one step automated goods receipt avoiding the need to enter the invoice manually into the system.

“At the stores they only need to confirm the delivery,” she says. “An automated goods receipting process adjusts the stock level accurately at the same time and it makes adjustments to the invoice for any goods not received. It cuts down on the amount of reconciliation on both sides.”

Maloy says the automated system should save the manual entry of up to 250,000 invoices a year for A&R in the first year with plans to grow that amount by adding more suppliers in the future. Whitcoulls hopes to automate over 80% of its invoices over the coming year.

“We estimate that without the automated invoices passing through the system ECN-TEDIS, A&R would have to employ 18 people full time on invoice processing alone. This will allow for a much smaller accounts payable team.”

Apart from the transaction-related efficiencies, Maloy says the use of the invoice data processed through the ECN-TEDIS system will improve goods receipting accuracy giving A& R Whitcoulls a more accurate and timely picture of its stock position, allowing the group to react more quickly to market demand.

“At the moment stock is replenished every two weeks in New Zealand and weekly in Australia, but the group plans over the coming months to replenish different lines more often in both countries.”

Maloy says part of the reason why the partnership works so well is because of The ECN Group’s industry experience. “They have been in the book distribution space for many years, they know all of these vendors and they have developed a good relationship with them.”

And The ECN Group has not forgotten the smaller suppliers.

“ECN will cope with those suppliers still working by fax, but they have also sourced an automated invoicing system suitable for smaller vendors. It’s part of the service we have come to expect from ECN.”

> The ECN Group
Stephen Baker, 09 912 2204
E: stephen.baker@ecngroup.co.nz
W: www.ecngroup.co.nz

April 2005